A discussion of ecommerce, online advertising, Web 2.0, web entrepreneurship, and just making the web convert for your goals.
Google just announced their new Click to Call ads. Which seem to really make me think about this recent hilarious video created by The Onion. The 911 call using the Google phone is fantastic stuff.
New Google Phone Service Whispers Targeted Ads Directly Into Users’ Ears
One of the biggest acquisitions in the advertising and technology space over the past couple of years occurred this week Google recently purchased AdMob for $750 million in stock.
There has been considerable speculation about why Google not only purchased Admob, but spent so much money in doing so. The obvious off the cuff answer is to get their hooks into the mobile display advertising space by acquiring the most well-known mobile ad network. Some people such as Niki Scevak don’t think that’s a particularly good idea, and others such as Silicon Alley Insider seemed to have to work a bit to justify it.
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Apparently Google has gotten rid of thousands of temporary workers according to the Associated Press based on documents filed to the SEC. I can’t say this is terribly surprising based on layoffs at my own employer and elsewhere in the tech industry.
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It’s been a crazy couple of months. Not only did my employer agree to be acquired by Yahoo!, but our competitive landscape has changed dramatically with Google acquiring Doubleclick, Microsoft acquiring aQuantive, WPP acquiring 24/7 RealMedia and AOL acquiring AdTech AG to go along with what they already own in Advertising.com.
Additionally, there are still some other large players who are also in the game such as News Corp./Myspace/Strategic Data Corp, and IAC/Ask.com.
Obviously this is a big land grab for these large companies, combined with trying to get innovative companies who are pushing things forward in online advertising. The Wall St. Journal talks about the ad exchange concept and how it relates to these acquisitions.
The media and blogs have been covering these stories quite a bit, but I’ve seen a lot of writers and commenters really not having a great gasp on what pieces of the advertising business each company has now, how they all stack up, and what it all means going forward. So, I’ll try and help out.
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As mentioned in my previous post, I just bought a new Dell desktop. One of the things I immediately noticed was the behavior outlined in this blog post about Google and Dell “hijacking” browser address bar type-ins to go to advertising-heavy pages.
Don’t get me wrong, I am an advocate of advertising on the web, but what I didn’t like was that I in the few minutes I spent trying to investigate this on my own machine I didn’t figure out how to turn it off. I primarily use Firefox anyway so I figured I wouldn’t have to deal with it anyway. However, I’ve noticed that even though Firefox thinks it’s my default browser (as I selected it should be) various other applications on my computer keep launching IE7 when they launch web pages.
While I think it’s okay for Google and Dell to work together on providing search results with some advertising, what they’re doing here is pretty offensive with the page above the fold being entirely ads and the difficulty of removing the behavior from your system.
Robert Scoble posted today about his observation about Google putting fewer ads on their search results, and how a Google employee confirmed this and said internal research showed that in the short term this costs them revenue, but in the long term it helps revenue because users trust the ads more and it leads to more clicks and buying behavior.
First, I think we have to ask if we believe this is true. I’d guess that Google would not make such a move without being very confident that it was going to eventually lead to more revenue. As a public company, it’s even risky to hurt short term results in this manner, so I’m betting it doesn’t even hurt their short term revenue results that much.
Scoble then theorizes that the purpose of this is also related to their Pay-Per-Action program:
Anyway, Google is doing that to make way for its new “pay per action†advertising type (announced yesterday). This is brilliant. Advertisers are going to LOVE this. Imagine I ran a print shop, like PrintingForLess. Now I could tie my advertising onto actually getting a sale, or getting a good lead. You see why Google needed more relevant advertising before turning this on. They want only potential buyers to see an ad. Anything else is noise. Noise reduces buying behavior.
Well, something doesn’t jive here because according to Google the Pay-Per-Action ads are only going to appear on their Adsense content network:
Pay-per-action ads are eligible to appear on publisher sites in the Google content network, and publishers can choose specific pay-per-action ads that are relevant to their site to run in new ad units that they create.
So, for at least right now, Google is not putting PPA ads in their search results, which is the area that Scoble is talking about. So either Scoble is incorrect in his theory, or his Google contact gave him information that points to it being likely that PPA ads will be showing up on Google search results soon.
There are lots of bloggers talking about Google’s launch of their Pay-Per-Action (beta) program which is really just adding CPA ad units to Adsense with a name to not associate it with CPA directly.
My first reaction is that people are jumping to lots of conclusions about what this program means, what it will do, who it’s competing with, and what it will mean for advertisers, publishers, and arbitrageurs.
I was going to refrain from making a post about this until I had really digested it more and potentially even tried out the beta program if accepted, but since Pete Caputa somehow confused me for being smart, I’ll at least post a few thoughts.
CPA is harder on publishers
There’s no arguing that with CPA ads, publishers take all the risk. This is good for advertisers, and generally it’s harder on publishers. However, GOOD publishers who understand CPA, persuasion architecture, delivering users who will convert, and funneling your site correctly, can actually make more money from CPA then they would from CPC or even a flat CPM. Publishers who don’t understand these things and are used the normal Adsense model will most likely struggle to generate more money with this ad type because of the difference in how you monetize a user.
CPA is a different ball game
There is an assumption that this will be a major challenge to affiliate networks like Commission Junction and Linkshare. Maybe it will be, but I can say that these networks provide a lot of value because they help advertisers create the right kinds of creatives and really optimize CPA. How much advice is Google going to really give on setting everything up? How much human touch will they provide to this process? With Google’s program, if the advertiser’s landing page sucks will Google consult to help them improve it? Sure, they provide access to their Website Optimizer Tool, but those who have tried multi-variate testing know that isn’t just a cut and dry automated process like Google is trying to make all of this.
Will this hurt lead generation or affiliate arbitrage?
I’m not sure I care. Businesses need to provide value, and if Google just made it more efficient so that it’s harder to arbitrage stuff, so be it. I’m not necessarily against arbitrage, but you can’t expect companies to leave things inefficient. Arbitrageurs are always looking for an edge, and most likely they’ll still find one somehow and somewhere.
Overall thoughts
Until we see the program in action, see what advertisers succeed with it, and how publishers can work with it and what types of results they get it’s hard to predict what will happen. The general assumption is that since Google has dominated with Adwords/Adsense/CPC they will dominate CPA by adding it to the mix. Well, Google HAS NOT dominated CPM and display advertising when they added it to Adwords/Adsense. I don’t think it’s a given by any means that this will work as well, however I do give it a better shot. I think the CPA direct marketing advertisers are closer to being the same group that does well with CPC now, while flat CPM and display advertising tend to be a different type of advertiser. It will be interesting to watch.
As a web analytics junkie I tend to notice trends and changes in my blog statistics. One recent trend I’ve noticed is that I get more search traffic from Google Blog Search than I used to get.
One tip I have for people on this, is that some web analytics applications make it hard to tell the difference between regular Google Search traffic and Google Blog Search traffic. Google Analytics for example lumps them both together as “google(organic)” in the search keyword statistic. My new favorite easy analytics application of the moment Clicky has a link to each actual seach query so you can see that it’s from Google Blog Search instead.
Why am I seeing more Google Blog Search traffic? I think it’s a combination of reasons. I would bet that Google Blog Search is getting more traffic and queries than the past as blogs grow in the public conscious and people realize Google has such a tool. (Why isn’t it an option on the Google home page?) I also think that this blog has continued to get links and gain relevance which helps it rank higher in Google Blog Search results.
That last point brings up a question though, how do you optimize your blog for Google Blog Search? Is it the same factors that the normal Google search uses? I’d guess that the normal factors still apply, but the Google Operating System blog has done some Google patent research and talks about both positive and negative factors that influence your blog’s ranking.
A couple of interesting positive factors were the number of feed subscribers (how does Google get this from other feed providers? Or is it just Google Reader?), links from webmail and chat (how do they know if someone clicks a Yahoo mail link and lands on my blog?), and using tags to categorize posts. The negative factors seemed aimed at spam, but some tips there would be to make sure you have multiple links in posts, avoid spammy words, and don’t duplicate too much content.
While doing some research, an astute coworker of mine noticed that the Google Enterprise Solutions page has links to their partners’ websites who are part of their Enterprise program. What’s interesting about this is that the page has a Google PageRank of 7/10, and to get listed on that page you have to pay Google $10,000 per year to be part of their program.
Before you claim I’m overreacting, let me state my case with some evidence:
1. The only way to get a link on this page is to pay Google $10,000 per year.
2. Google is against the inclusion of paid links in their Pagerank algorithm that helps determine search results. Here is a quote from their Corporate Technology page:
PageRank also considers the importance of each page that casts a vote, as votes from some pages are considered to have greater value, thus giving the linked page greater value. Important pages receive a higher PageRank and appear at the top of the search results. Google’s technology uses the collective intelligence of the web to determine a page’s importance. There is no human involvement or manipulation of results, which is why users have come to trust Google as a source of objective information untainted by paid placement.
3. Google’s most prominent blogger Matt Cutts has spoken out against paid links and recommended use of the rel=”NOFOLLOW” attribute.
4. Google could add the “rel=NOFOLLOW” attribute to the links on that page in order to not pass Pagerank credit from the page to the partner websites. According to the Wikipedia page on Pagerank:
In early 2005, Google implemented a new value, “nofollow”, for the rel attribute of HTML link and anchor elements, so that website builders and bloggers can make links that Google will not consider for the purposes of PageRank — they are links that no longer constitute a “vote” in the PageRank system.
Why isn’t Google putting the rel=”NOFOLLOW” on these links?
As a side note, the links to Google in this blog post have the rel=”NOFOLLOW” on them because I don’t want to be passing on PageRank to that Enterprise Partners page.
5. Google could also just not rank the Enterprise Partners page with PageRank as they appeared to have done with their Adsense Case Studies page. You’ll see it is not ranked, and the page has existed for a long time meaning Google has intentionally chosen not to rankthis page. They also don’t even link to the publisher websites or in the case studies themselves for the most part, they just write out the text like ApartmentRatings.com with no link. However, I did find that a couple of the older case studies like the Weblogs Inc. one that do have links out. Of course, there is no page rank on the case study giving them no benefit.
Why do the partners paying $10,000 seem to get links with a high PageRank?
6. Google IS including the Enterprise partners page in their index which leads me to believe they are counting the Pagerank on the page. See the #1 result on the search query for “google earth specialist”.
The counter argument to my evidence is that the partners really aren’t paying for the link, but that the $10,000 fee is for the overall Enterprise partner program. True, but the ONLY way to get listed on the Enterprise Partners page is to pay Google $10,000 per year, which means the ONLY way to get a link on that page is to PAY FOR IT!
From what I can tell Google is not taking the steps to exclude the power of those links in their algorithm. Those are not just “editorial votes” as a natural link is supposed to be in the algorithm, those links are there because money exchanged hands.
I actually agree with Google’s stance on not including paid links in their algorithm, but there’s really three options here:
1. Google is being sloppy and not intending to be counting paid links, but they are.
2. Google is taking money for links and looking the other way.
3. I’m missing something, please let me know if I am.
In closing, I see that Google acquisition YouTube.com has now been added to the Google Products page that happens to be a PR9 page. If they’re charging $10,000 for a PR7 link, let’s hope YouTube didn’t have to give back too much of that $1.65 billion to be listed on this page!
UPDATE:
Apparently Google had a different but somewhat similar problem with using NOFOLLOW on most of the links on Google Video except for the links to their advertisers. Matt Cutts responded in the comments that it was a mistake and would be fixed as fast as possible. Good to see them fix and own up to the mistake. But the question remains, is the case I mention above a mistake?
UPDATE Part 2:
The page in question no longer carries a Pagerank. I’m guessing from the comments Matt Cutts had this changed. Thanks for taking action Matt, as I believe Google should be careful with links that may be considered “questionable” on whether or not they are pure natural links.
The Google Adwords/Adsense individual site targeting has always been available on through CPM ad purchases. When Google first launched this ability, it had a $2.00 minimum CPM bid, then later dropped to a $1.00 CPM, then later dropped to $0.25 CPM, and now they’ve announced a beta starting in March for advertisers to test buying on sites directly on a CPC basis.
Frankly I’m surprised it took them this long. The reason they had to drop the minimum bid each time was because advertisers haven’t gotten results to make these campaigns profitable. Every time I’ve launched a new Adwords campaign I try site-targeting, and it’s just never profitable on a CPM basis for me. It ends up costing way more per click than buying in CPC via the search or content network.
While my experience is obviously anecdotal, I’m sure many advertisers experience the same thing. Additionally, when spending so much time focusing on CPC, it can feel a tad strange shifting your focus to looking at CPM campaigns all within the same campaign screen where your goals and metrics may be different.
So, while I’ve been critical of Google lately, I think this is a wise move for them, publishers, and advertisers. It’s what they know best, it’s what the advertisers using their system are used to, and it should mean more advertisers are doing site-targeted buying meaning more competition and thus higher revenue for publishers.
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